Preview

Fotajek

Good Essays
Open Document
Open Document
405 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Fotajek
The organizational and financial structure of the Fojtasek companies had been in flux since the spring of 1994. By March 1995, three different financial transactions have been proposed to streamline and restructure the firm: an outright acquisition, a leveraged recapitalization, and a hybrid transaction called “Private IPO.” Heritage Partners is interested in taking a stake in the Fojtasek Companies by proposing a“Private IPO” transaction. The paper will analyze the health of the Fojtasek companies and the economic benefits gained from Heritage Partners’ proposal. Through careful calculations, one would recommend the proposed transactions to take place between Heritage and the Fojtasek family. Founded in 1986, Heritage Partners has developed a business expertise in family companies. Their value-added can be seen in the General Partners, all of whom had successful track records in Private Equity. Of the three elements that distinguish them, the most important is their development of the “Private IPO” structure. This financial strategy enables majority holding while reducing estate taxation for the founder and management. For the Fojtasek family, they had been seeking potential buyers to restructure their company. Unlike its other product and distribution channel, business in the Baloleum Division has been declining. Additionally, the founder Joe Fojtasek has decided to step down at the age of 73 and hand over his role to his sons. Thus, Fojtasek companies decided to take advantage of the opportunity to radically streamline its structure for future growth—buyout, leveraged recapitalization, or “Private IPO.” There are two common disadvantages with leveraged buyouts and recapitalizations: a higher credit and default risk that comes with having a high leverage, and a possible loss of majority control that can lead to conflicts of interest. From both Fojtasek’s and Heritage’s perspective, it would be optimal to have a hybrid transaction that would lower debt levels

You May Also Find These Documents Helpful

  • Powerful Essays

    Privately held firms looking for ways to increase cash flows are faced with a few decisions to make. Some of the options businesses have to increase their cash flows are going public through an initial public offering, merging with another company, or acquiring another company. Each of these methods has their own benefits. The method is determined by which method is agreeable to the company’s level of risk.…

    • 1586 Words
    • 7 Pages
    Powerful Essays
  • Satisfactory Essays

    In order to create an initiative for growth, an analysis of the company 's short term and long term financing needs are assessed to determine strategies for the company to manage working capital. The suggested initiative to increase XYZ Company, Inc. revenue over the next five years is by acquiring assets through a merger with UVW Company to produce more of product X. Companies must be able to manage growth either through the acquisition of assets or through the capital budgeting process. Through the acquisition of assets, external financing will be required. Growing quickly will allow XYZ Company to gain a larger market share and reinforce its viable position in the marketplace. Expanding too rapidly can have consequences. If the company has too much debt-financing and cash flows are reduced the company will risk being unable to repay its debts. Management must ensure the business can grow, what funding may be needed, and determine the sustainable growth rate.…

    • 575 Words
    • 3 Pages
    Satisfactory Essays
  • Satisfactory Essays

    In March 1985, Marty Wood, the senior VP and CFO is faced with an important opportunity. He believes that changes in the food industry will yield significant opportunities for Flowers Industry. As such, he wants to raise $50 million dollars for investment capital. The purpose of the case is to debate which method of raising the money is best. The options are long term securities, common stock, straight debt issue, and convertible subordinated debentures. He seeks information from bankers and analysts, but eventually has to make a decision himself.…

    • 406 Words
    • 2 Pages
    Satisfactory Essays
  • Better Essays

    Allen Lane

    • 1040 Words
    • 5 Pages

    However, significant risks are prevalent in acquiring PTI. First, more one-third of PTI’s sales originated from five companies and it is uncertain that without Harry Elson’s personal efforts if their patronage will continue. Secondly, the bank valuation of PTI ($600K) appears inflated as the bank’s valuation is notably more than PTI’s book value ($292K), calculated with an inflated price/earnings multiple for a company with no proprietary assets and does not discount any contingent liabilities. Finally, it will be difficult for PTI to achieve long-term growth since PTI has no proprietary assets and that the company is in a mature industry in a slowing economy.…

    • 1040 Words
    • 5 Pages
    Better Essays
  • Good Essays

    Riordan Manufacturing

    • 549 Words
    • 3 Pages

    Riordan Manufacturing is a global manufacturer with projected annual earnings of $46 million. The parent company Riordan Industries Incorporated is a Fortune 1000 enterprise. The company specializes in manufacturing plastic beverage containers, custom plastic parts, and plastic fan parts. Manufacturers from the automotive, aircraft, appliance, as well beverage makers and bottlers are major customers. The Department of Defense is also a significant customer. Continuous growth is important to Riordan. In 2000, the company expanded its operations in China. The corporation now wants to consider other expansion options. This paper will evaluate the following expansion options: Going public through an IPO, acquiring or merging with another organization.…

    • 549 Words
    • 3 Pages
    Good Essays
  • Best Essays

    Ldr 531 Week 5

    • 2421 Words
    • 10 Pages

    The late Don Ruiz was the former CEO who was responsible for setting the goal of 40% annual growth. Ruiz was excited about the IPO move, and saw the change as an opportunity to develop new strategies (University of Phoenix Scenario, 2005). Ruiz’s successor and siblings, together with the board of directors are strongly supporting the former CEO’s ideas, as both the board and the current ownership have a personal interest in the move. Both will gain a large sum of money if the IPO becomes a reality.…

    • 2421 Words
    • 10 Pages
    Best Essays
  • Powerful Essays

    Hertz Case

    • 3039 Words
    • 13 Pages

    EXECUTIVE SUMMARY In April 2005, Ford announced its intention to investigate possible strategic alternatives for Hertz. At the same time, Ford’s stock price went down significantly. This negative reaction from the market shows Ford’s lack of confidence in its future operation, since Hertz is one of the strongest subsidiaries and revenue sources for Ford. Even though Ford would lose significant value of itself in this transaction, the slump in Ford’s main business especially in North American segment and a possible downgrade of its bond rating forced them to conduct drastic financing strategy to recover itself. The company had two alternatives to rid of Hertz: selling to a private bidding group via LBO transaction and listing on public stock exchange market. Their priority was to acquire the immediate cash through this transaction of Hertz. Our analysis of the LBO offer proposed by Bidding Group yields an expected return of 21.2%, and expected return by the public market to equal 24%. FORD’S MOTIVATION In 2005, Ford is valuing possibilities of selling its 100% subsidiary of Hertz in the most financially favorable manner. During Jacques Nasser’s presidency, Ford lost its financial stamina. Nasser successfully finalized many deals including Volvo, Land Rover and Hertz, yet this aggressive business expansion and buyout gave Ford a very vulnerable position. As the Ford’s need for cash increase, it began considering the strategic alternatives of selling Hertz privately to private investors and going to a public offering. This dual truck process can increase the bargaining power for Ford in the bidding for Hertz. FORD’S DUAL-TRACK PROCESS (1) During Jacques Nasser’s presidency, Ford’s cash reserve was quite low and they were looking to unload Hertz in the most financially feasible way. By putting Hertz on the market to privately held bidding groups like Carlyle’s and not just releasing an IPO, Ford created a more flexible and…

    • 3039 Words
    • 13 Pages
    Powerful Essays
  • Satisfactory Essays

    Due to the fact that, Ross Johnson, the CEO of RJR Nabisco and other executives had access to information that the market had not yet received, they sought to evade the market reaction by taking the company private. By going private, the management could gain more freedom on the control of the company without being pressured by shareholders. Thus, they did not have to be concerned about the stock price and could concentrate on the firm’s operations. Amongst the different strategies that they could have used, RJR was a perfect candidate for a LBO. First off, RJR had a stable cash flow from its divisions which was also sheltered from business cycles. 3 They also had low capital expenditures and debt and a lot of unused debt capacity. 3 Furthermore, using more debt would provide tax shields.…

    • 369 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    Private equity firm, Palamon Capital specializes in managing, funding, and developing small to mid-sized companies into public ownership. Palamon’s strategy is to buy a controlling stake in an up and coming company for 10 – 50 million EUROS grow the business, and implement an exit strategy. As the private equity market in Europe becomes more cut- throat and competitive, Palamon Capital, a private equity company Based in the UK is looking to diversify and expand its assets from focusing solely on the UK markets to focusing on the European markets as a whole. As a part of this expansion and diversification plan, Palamon Capital expects to purchase a controlling stake in an Italian software company, TeamSystem S.p.A.. After analyzing TeamSystem S.p.A.’s financial statements and cash flows, going fourth with the controlling investment is a great opportunity for Palamon Capital as a company in order to expand westward into Europe. Not only is it a great growth opportunity, but Palamon Capital is getting great value for their money. After following all the investment procedures, Palamon Capital should proceed with the investment and pay 25.9 million EUROS for their 51% controlling stake in TeamSystem S.p.A.. After finalizing the transaction, the current market value for TeamSystem S.p.A. will be 65.84 million Euros, with Palamon Capitals controlling stake worth 33.58 million Euros (shown in exhibit 1).…

    • 852 Words
    • 4 Pages
    Powerful Essays
  • Powerful Essays

    One of Citigroup’s main concerns was the risk of their exposure from holding leveraged loans. Due to the increasing risks and costs associated with holding these loans, Citigroup approached several large investors, including a private equity firm and a hedge fund, about purchasing leveraged loans from their portfolio. Blackstone expressed interest in a portfolio that contained a total face value of $6.11 billion, with16 different issuers. Blackstone, one of the world largest private equity firms, was reviewing materials for their potential purchase of a $6.11 billion pool of leveraged loans from Citigroup, one of the world’s largest banking entities. Most of these loans were used to finance large leveraged buyouts (LBOs). Citigroup would help the transaction by offering debt financing for the purchase of the loam, while Blackstone would offer the rest of the fund and take the first loss.…

    • 887 Words
    • 3 Pages
    Powerful Essays
  • Powerful Essays

    They engaged in leveraged buyouts (LBOs), growth capital, and privatization. In LBOs, they use capital structures to find the best combination of price, leverage and returns. In order to demonstrate a serious commitment and to achieve a desired rating, they decided in a minimum capital structure of at least 25% equity whereas debt is roughly 4 to 5 times EBITDA depending on market conditions. They also support its management by assisting in setting priorities right for the future of the firm, reviewing the organizational structure to ensure it runs optimally, helping to build the management and leading the integration process in the event of an acquisition.…

    • 2246 Words
    • 23 Pages
    Powerful Essays
  • Satisfactory Essays

    Aik Fotboll

    • 491 Words
    • 2 Pages

    AIK Fotboll is a Swedish football club from Solna, Stockholm. They play in the highest division in Sweden called Allsvenskan. They are often established up high in the tables and AIK is ranked as one of the best teams in Sweden. AIK is also the biggest club in Sweden, with more supporters than any other club and they also play at Råsunda, Sweden’s national football arena.…

    • 491 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Fizik

    • 1117 Words
    • 5 Pages

     Inelastic Collisions  Elastic Collisions  Stationary Target  Moving Target  Collisions in 2-Dimensions (Glancing Collisions)…

    • 1117 Words
    • 5 Pages
    Good Essays
  • Satisfactory Essays

    fjsk

    • 367 Words
    • 2 Pages

    Yeah it is and I can taste of my friends, and I can touch with my daughter, I just got back fro the same with me you're nice more awesome and i have cooties to get out for dumbasses so i hate losi and you can tell them already? And how do you mean by own? I think I should know this is the only game I didn't start and i have to put cooking oil in it and there was still a bunch of stuff that can still distracted and I don't have any muscle at all and it'll be a problem? I think I should know this is the only game I didn't start and end. Yeah it is cause it's ok you thought about that. Yeah it is cause it's like you if I was a woman who has been so sure about everything and putting them in a while imma need you do that to be in your mouth already have to be happy I know i have a little kid and then I'll be doing stuff that I don't know m akes a little kid voice of my friends with it sometimes takes to do that then i wanna be friends and you were dancing with the rest in study hall and spanish the time is whenever ones that was the only way for me too. Yeah you were fine with me you're not being cocky i have a little bit and besides OT kept getting taken care that you're the awesomest person who you playing tonight or something and I want some ice cream but I don't wanna be friends and you were giving away for a little kid and i don't want it was funny though and help me with a little kid voice to do that then you must be the boss that was funny when you told me and it'd freak him out of my car and fell and hurt me? And how do you mean by own. Yeah you are being cocky and then i wouldn't be a problem with my daughter too though cause he probably scratching my head all the time. Yeah i have…

    • 367 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    foyaj

    • 846 Words
    • 4 Pages

    Globalization is the buzzword of today. Economies of the world are being increasingly integrated as new technology and communication has brought people together. We often hear the phrase that the 'world has become a global village' - which itself signifies how much has changed in the world in the past few decades. American businessmen are investing their time in studying the culture of the Middle East, so that they can negotiate with their counterparts in a better way. Young graduates in India are being taught how the Americans roll their R's, so as to make a seamless conversation with their clients in many of the call-centers! The phenomenon that is globalization, has brought new dimensions to this world, and people are mingling with each other like never before. The social, economic, and political changes that globalization has brought have been accompanied by some challenges. We will not approach its negative effects as a cynic, but as a student or an observer, so that we are free of any kind of prejudice and bias, and understand the topic in a better way.…

    • 846 Words
    • 4 Pages
    Good Essays